Posts Tagged ‘railroads to nowhere. further waste in Stimulus II’

“Lest you think Washington has begun a new era of fiscal self-restraint, consider this week’s act of political retribution by Transportation Secretary Ray Lahood. Newly elected GOP Governors in Ohio and Wisconsin wanted to kill high-speed rail projects and instead use the money to fix their battered roads. Sorry, guys, Mr. LaHood reclaimed the $1.2 billion and handed it to 13 other states that still want to build these high-speed trains to nowhere.” ‘Subsidy Trains to Nowhere’, The Wall Street Journal, December 11, 2010

The Obama administration may have been shell-shocked by the mid-term elections, but insufficiently to reconsider one of the boon-doggles pursued via Stimulus II. President Obama and his Transportation Secretary, the grammar-challenged Ray LaHood, are hell-bent on building mass transit systems across America, whether the median voter desires them or not. So, even though the two new GOP Governors, Scott Walker and John Kasich , turned away the projects on grounds of cost-ineffectiveness, Wisconsin and Ohio taxpayers will retain the privilege of paying for new train projects, even though they will be build in other states. Federalism under Robin (La) Hood!

Nevertheless, Wisconsin and Ohio taxpayers ultimately will thank their governors for saving them additional monies in the longer term. For none of the high-speed trains projects will ever become economically viable, even if Stimulus II is viewed as a sunk cost. The problem is that high-speed rail systems always run over budget and end up heavily subsidized. Only two segments of two such railways in the entire world have broken even, and they are in high-density areas in France and Japan, not running across sprawling, typically sparsely populated terrain in the United States.

A recent economic study of the California high-speed train project should open eyes in Washington, but almost certainly will not do so. In the mid-1990s, California created a high-speed rail authority to prepare a plan for an economically viable rail system. A decade later, in 2008, the Authority obtained legislative approval for a $9.95 billion bond to partly fund the then-believed to be $40 billion project. It suggested that a $55 ticket would attract 94 million passengers a year between Los Angeles and San Francisco, and would create 450,000 sustainable jobs. It assured taxpayers that the railway would operate at a surplus.

Well, two short years on, an independent study forecasts that the project will actually cost somewhere between $62 billion and $213 billion. It forecasts that one-way tickets for the two and a half hour ride will cost $190. It predicts that ridership, fully 10 years into the project’s operation, will reach perhaps only 5 million passengers. As for the 450,000 new jobs, well that figure would be twice the size of the current active work force of the State of California. Stimulus II evidently has affected minds as well as perceived job creation.

The most likely outcome is that the very large majority of travellers will continue to fly or to drive between Los Angeles and San Francisco. In the specific case of California, this is likely to accentuate the current tax revolt, pushing the State yet further into bankruptcy. President Obama, by then, will be well out of office, and so hopefully, the Governor will be rebuffed much as was the Governor of New York by President Gerald Ford when New York confronted a similar economic black hole.

That is, if the project is ever completed. The likely outcome, as the United States confronts the reality of its debt crisis, is that all those high-speed rail systems will be rusting somewhere between their fanciful destinations: railroads to nowhere.